I think I'm a part of the first generation of journalists to skip print media entirely, and I've learned a lot these last few years at Forbes. My work has appeared on TVOvermind, IGN, and most importantly, a segment on The Colbert Report at one point. Feel free to follow me on Twitter or on Facebook, write me on Facebook or just email at paultassi(at)gmail(dot)com. I'm also almost finished with my sci-fi novel series, The Earthborn Trilogy.

World of Warcraft Drops a Million Subscribers in Three Months

Earlier this week we examined how Star Wars: The Old Republic lost its way as it attempted to compete with the reigning king of the MMO universe, World of Warcraft. By copying rather than innovating, and relying too heavily on its license, SWTOR steadily lost subscribers until they sunk under a million just recently. To entice players to return, the game announced that it’s going free-to-play this fall. Many MMOs have followed this path, but none cost nearly as much as SWTOR and the project has been a constant headache for EA.

But as it stands, its competition isn’t doing so hot either. World of Warcraft is still the top MMO around with 9.1M paid subscribers. The only problem? Three months ago, that number was 10.2 million.

Activision announced in its quarterly earnings report that WoW had indeed lost over a million subscribers in the last three months. The game has been in decline for quite some time, but this drop is the sharpest to date.

This is a real problem for Activision, who relies heavily on WoW for as much as 30% of its revenue. Vivendi, the French company which owns Activision, has been looking to sell for some time, but they’ve been having trouble offloading to anyone as many seem to be wary of the company’s future. Our own Agustino Fontevecchia has a great in depth look at Vivendi and Activision’s woes that I highly suggest you check out.

What’s detracting from WoW is fairly obvious. Diablo 3 clearly cannibalized a lot of players since its release, but even though it’s an Activision/Blizzard property, it’s not a subscription based game. And then of course there are the legions of other free-to-play MMOs and MOBAs, led by League of Legends which now has well over 15M players and has become the most played game in the world.

Then there’s the simple fact that WoW is just getting old. It was released in 2004 and though it’s had many expansions and updates since, it’s aging. Additionally, many longtime players see the new changes as poor decisions which have caused them to flee the game entirely.

The future looks rather dark for WoW heading into the coming months and years as well. Though Mists of Pandaria is out this fall, giant fighting pandas are hardly going to persuade the hardcore MMO crowd that the game isn’t catering too much to casuals. Additionally, Fontevecchia posits that the upcoming Guild Wars 2 is going to be a huge hit to WoW, as it’s a very obvious step forward for the MMO genre. Star Wars: The Old Republic failed in part because it tried to copy WoW too much. Guild Wars 2 has similar elements, but judging from the beta, it definitely feels like an evolution of the genre, and will make WoW feel decidedly last generation.

It’s not all bad news for Activision of course. They still set records every year with their annual Call of Duty release, and this fall’s Black Ops 2 is surely going to be a huge seller. Next year Starcraft 2 fans will welcome the Heart of the Swarm expansion, and that game continues to be played constantly as an eSport around the world. And then there’s the mystery IP that isn’t Warcraft, Starcraft or Diablo, codenamed Project Titan, that Blizzard has been working on for years.

But for their most profitable game to be bleeding this badly is rough for the company, and Diablo 3 not being the beloved smash hit it was supposed to be isn’t helping matters either. As their parent company tries to unload them, it might be shaping up to be a pretty rough year for Activision.

Update: It appears Vivendi is backing off its plans to try and sell Activision as Eric Savitz reports.

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Sustained sub losses for WoW are inevitable. I’m sure some level of churn has always been coursing through the game. In the past however Blizz was probably able to pull in new players to make up for those losses. Having been out for almost a decade, you have to wonder how many new, potential WoW customers are actually out there? Not as many as before, and those that are have a wealth of FTP MMO’s and other things to occupy their time with.

On the bright side, Blizz is clearly aware that the purely subscription based model is winding down. Just looking at Diablo 3′s RMAH and it’s obvious that Blizz is looking at pay once, generate continuing revenue elsewhere, options. Not that they’ve smoothed the edges on that yet. It’ll be interesting to see how they apply what they’ve learned to Project Titan and other titles.

Honestly, I would not at all be surprised if WoW goes FTP (beyond the lvl 20 cap) in some form during the next year or so.

There is another important factor in the subscriber loss that this article does not describe, probably because non-gamers may not understand it clearly.

Blizzard has generated expansion packs for “World of Warcraft” roughly once every two years. The most recent expansion was released November 2010, and a new one will be released next month. There tends to be a subscriber dip toward the end of every expansion cycle because there is nothing new for players to do in the game, and as a result, many take a break while waiting for the new content to arrive.

The game’s subscription numbers will bounce back somewhat when the “Mists of Pandaria” expansion is released on Sept. 25, although it almost certainly won’t be enough to make up for the loss of players the game has suffered over the past two years. But how can it? This is an 8-year-old game. Gamers will play a good game for a long time, but even the best game can’t hold attentions indefinitely, not when there are newer and shinier games on the market all the time.

Board members and shareholders may look at the dropping numbers and see only disaster, but the fact that a computer game still boasts nine million monthly subscribers eight years after its release is astounding. “World of Warcraft” could easily remain profitable with one million or two million subscribers. At nine million, this game is still like a machine that prints money.

“Guild Wars 2″ is not the first so-called “World of Warcraft killer.” Previous massively-multiplayer online games that were supposed to topple Blizzard’s giant have included the original “Guild Wars” (2005), “The Lord of the Rings Online” (2007), “Age of Conan” (2008), “Warhammer Online” (2008), “Aion” (2009) and “Star Wars: The Old Republic” (2011). All of these failed to approach the number of subscribers “World of Warcraft” has. I myself expected the “Star Wars” game to be the MMO to finally overtake “World of Warcraft,” but it never even came close.

It is worth noting that “Everquest” — a game that was five years old when “World of Warcraft” was first released, and the most popular MMO at the time — had a subscriber base that peaked somewhere around half a million. Granted, that’s a numbers from 10 years ago when online gaming was not as mainstream as it is now, but “Everquest” still has dedicated players today, and still releases expansion content on a regular basis. The point is that while those on the business side of the picture will never be happy when “World of Warcraft” has fewer paying customers instead of more, this is still an incredibly healthy game, and while hardcore gamers may go looking for the newest and latest, there’s no reason for dedicated “World of Warcraft” players to think their game won’t continue on for many more years. It’s not exactly looking “dark.”

Paul, what do you think about the idea floated (mostly unofficially on forums and such) that Pandaria is a very clear play to increase subscriber based in China?

It seems like a valid theory, because Pandaria was met with some derision from US WoW players when it was announced, which makes me wonder if Blizzard is unconcerned with gaining Chinese players at the expense of Western ones.

I used to play World of Warcraft and it was great for several years. But then they started revising the characters. For 5 years I played a mage and suddenly her spells were all changed. I had to relearn her over and over with each of the developer’s whims and with that, they were never strong enough to win battles. A lot of us gave up. Pandas don’t impress me now. I’m done.

Now I play SWTOR. It’s a great game. Most people quit because getting to level 50 was too quick and easy. Also, the creators of SWTOR came up with a unique approach and that is to include the story in the game. This is great because you learn about your character and the world, inside and out. This is bad because when you click a quest, even dailies, you have to listen to the story again or click the spacebar multiple times. The story idea is a good one- but it needs to be cut much shorter for gamers. We like to game most.

One thing WOW and SWTOR have in common is in both games you have to join a guild in order to progress your character at higher levels. Rift is different in that they have the major fights in the field so anyone can join in. There’s not much of a need to join a guild. Sadly most guilds only play in late evenings which causes problems for players. And guilds become like family obligations with personalities that become bothersome. This would make Rift a stronger game for players. You can go out and play anytime.

WOW paved the way for magical environments and dragon mounts. Blizzard added barber shops to change character appearance and the UI. But, too many add-ons from outside sources were needed to use the game. Some could bring viruses into the PC. Security became a huge issue.

Still the biggest problem for MMORPGs now is the economy. People are watching their finances closely wondering if this is a wise investment of time and money.

I’m still enjoying SWTOR. I’ll continue to play as a subscriber but watch the clock closely now.

I’d just like to point out that while the panda thing is a gimmick, the pandas have been part of the Warcraft universe since before WoW was first released. The pandas are in fact part of what some of the hardcore franchise lovers liked. The author doesn’t know what he’s talking about.

This industry has been plagued with bad ideas and bad designs for years. SWTOR was no exception. Despite spending record amounts on the game, it was essentially seen as “a WOW clone”, utilizing pretty much all the same gameplay concepts as WOW. Dedicated WOW players didn’t switch over since there was nothing new there and disgruntled WOW players didn’t join up since there was nothing new there.

Basically the MMORPG pay-to-play genre is plagued with WOW clones, but in a content-driven environment, you can’t directly compete with a game that’s years ahead of you on content creation.

The problem is that WOW is getting old. Released in 2004, it’s one of the oldest surviving MMORPGs out there. Players are getting tired of the same-old-thing and nobody’s innovating. Kickstarter projects are literally bringing in millions to develop theoretical games based on innovative designs because there are a lot of players ready for it and none of the big companies are doing it.

Why the industry continues to be so clueless about what’s going on with MMORPGs is baffling to me. It’s a billion dollar industry being run into the ground by people who have no idea what made WOW popular, why it worked or how to effectively compete with it. I think you could pull any 14 year old WOW player into a room and get better ideas from them than you’d get from the typical business executive in charge of making decisions in these major developers.